NEW YORK, Nov 1 (Reuters) - New York City agreed yesterday to pay $70 million to settle accusations that it had mishandled a long-standing Medicaid program, setting off a war of words between the city's top prosecutor and U.S. Attorney Preet Bharara.

In papers filed in Manhattan federal court, the city admitted that from 2000 to 2010, the Human Resources Administration had reauthorized 24-hour personal-care services for certain Medicaid recipients without securing the proper authorization from medical personnel or obtaining independent medical reviews.

The settlement stemmed from a suit brought under the False Claims Act, in which prosecutors claimed that the government had paid tens of millions of dollars as a result of the city's alleged mishandling of the personal-care services program.

The FCA is a sweeping law that allows for the recovery of statutory penalties and treble damages when a false claim is paid by the federal government.

After U.S. District Judge Jed Rakoff signed off on the pact, Corporation Counsel Michael Cardozo issued a statement downplaying the amount of the settlement, which he said was less than half of one percent of the cost of the program during the time period at issue.

Cardozo insisted that the city had provided the services in good faith and said the government's suit was "based on technical record-keeping deficiencies and nothing more."

He also questioned the government's use of the False Claims Act to resolve disputes.

Bharara replied that it was "unfortunate" that Cardozo would "contradict the stipulations he personally signed and submitted to the court."

He said the city's claim that the dispute was about "paperwork" had been rejected by Rakoff when he threw out a motion to dismiss the case.

(Reporting by Noeleen Walder)

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